THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

SUZANNE MALVEAUX, CNN ANCHOR: Live from Studio 7, I'm Suzanne Malveaux. President Obama is set to hold a news conference minutes from now, at the top of the hour. The White House and Republicans are locked in a battle over reducing the deficit and raising the debt ceiling to keep the country from defaulting on its bills. Now, the two sides hold more talks today after negotiations last night ended with still no agreement.

WOLF BLITZER, HOST, "THE SITUATION ROOM": Good morning. And I'm Wolf Blitzer here in Washington. It certainly is a critical August deadline that is looming, and the stakes are incredibly high right now for the economy and for all of the political players. Suzanne, there's no doubt right now that what happens over these coming hours and days could have a huge impact on every viewer out there as far as the economy is concerned.

MALVEAUX: And Wolf, what's really interesting is that you've got this looming deadline August 2nd. A lot of people questioning what that really means. Is it going to be, as some folks have said, financial Armageddon? Is it really going to be this kind of crisis scenario that some of the Democrats are talking about, some of the economic analysts are talking about, or is this more political here? I mean, there is an element of gamesmanship that certainly seems to be going on in Washington. No surprise to either you or I when it comes to that.

BLITZER: Yes, but I want to point out, though, among all of the responsible leaders in that White House Cabinet Room that have been meeting over the past few days, will be meeting there later today, they all agree, Democrats and Republicans, all the White House officials, to be sure, that there cannot be a default. There can be no default on the U.S. government's Treasury bills. The United States is going to pay its debt one way or another, but at the same time, it's not going to be easy, by any means.

MALVEAUX: I want to bring in our own Ali Velshi to talk a little bit about the financial aspect of all of this. And Ali, one of the things that we were talking about, Wolf and I, is essentially, how much of this is bluster and how much of it is real when you talk about the interest rates going up, when you talk about derailing the economic recovery, whatever recovery there is? Is that really going to happen on August 2nd if we cannot pay our bills?

ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: We can't say for sure what's really going to happen. We can say -- let's bring it down to the level most people can understand it. If you have bills to pay and you don't have enough money for it and you decide that you're delaying the payment of some of them, all of your interest rates could go up because credit card companies work that way. If you breach one, the others charge you more to borrow money.

It's the same thing in the world markets that if there's some sense that the U.S. is not capable of meeting its obligations, it may cost more money for the U.S. to borrow. So much of our money already goes to interest payments that every extra dollar that we spend on interest is a dollar that's going toward government programs. It's not going toward social services or education.

The bigger question here, Suzanne, is -- remember when Lehman Brothers failed, it failed on a weekend, and a whole lot of smart minds decided to let it fail, thinking that the market would take it in stride. Clearly, the market didn't take it in stride. And international borrowing and lending came to a grinding halt for three weeks.

We don't know what this would be like, but there's a risk that the reaction could be bigger than that of Lehman Brothers, and that will drive business and hiring to a halt.

MALVEAUX: Ali, who's the market responding already? How are they reacting to this stalemate?

VELSHI: Well, markets are down today about 1.5 percent, which is a big drop. But there are other reasons for that, as well. We had that disappointing jobs report on Friday. We've still got continuing debt problems in Europe, and now it's bleeding into Italy. So it's hard to tell, when the Dow's down 1 percent or 1.5 percent on the S&P, whether that's got to do with this discussion or whether it's got to do with something else.

At the moment, markets are generally betting that they will come to some sort of agreement and that the debt ceiling will be increased.

PHILIPS: All right, Ali Velshi, thanks for watching this very closely. We're going to see what the president has to say.

I want to go back to Wolf. I understand that you've got some of our colleagues there in Washington to talk politics.

BLITZER: We certainly do. And there's a lot of politics going on, not only the policy but the politics, as well. Our chief political analyst, Gloria Borger, is here. Gloria, the president was ready over the past few days to go for a huge, historic deal, some $4 trillion -- trillion -- in projected deficit reduction (INAUDIBLE) to the increase in the deficit that is projected over the next decade.

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Right.

BLITZER: But it's not going to happen because the Republicans don't want to go forward with any increase in what's called tax revenues.

BORGER: You know, it's interesting because when the vice president had his working group, they were talking about sort of a $2 trillion deal. The president doubled down and said to the House speaker kind of, This is our moment.

And I think it's interesting to me because I think you see that John Boehner and Barack Obama have really established a relationship that surprises many. Boehner is a legislator, a long-time legislator. It's clear he wanted to do something big. The president wanted to do something big and long-lasting so they don't have to come back to it. And then each wing of their own party said, You know what? We cannot go along with this.

You have, for example, 230 Republicans in the House who have signed a "no new tax" pledge. Well, how are they going to react to any deal that even changes the corporate tax rate, et cetera? They would just say no.

BLITZER: The president, John King -- he was taking a big risk in putting Social Security and Medicare on the table, to the irritation of his Democratic base.

JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: And so you have the president, who is literally the man in the middle here. Sometimes we say you want to position yourself in the middle politically. That's the smart place to look to be politically...

BLITZER: We used to call it triangulation.

KING: Right. But he is in the middle here because he's trying to get the Republicans to give up the holy grail of Republican ideology, some tax increases. He's trying to get the Democrats to give up what they believe is their most potent political issue going into 2012, which Medicare, and then adding Social Security, touching entitlement programs. So you have the Democratic president saying to the Republicans, Give me some, to the liberal base, Give me some.

At the moment -- this is why this is so interesting to watch going forward -- it is the Democrats who are grumbling. They believe, in the end, if the president says they have to do it, Wolf, most Democrats, not all -- be careful and we'll have to count the votes here -- most Democrats will be for whatever the president is for.

The question is, where can you move the Republicans on taxes? Is it just closing loopholes? Obviously, the tax rate increase is not going to happen as part of this deal right now. This is the first vivid proof of the Tea Party power. This is what they ran on. There have been some deals cut with this president, and we say, Oh, they can make a deal. This is the issue these new guys ran on. This is -- to them, this is the singular commitment they made to the American voters, and they're going to be tough on the speaker.

BLITZER: And Suzanne, there's no doubt that the real issue going forward, if there is a deal, let's say, between Boehner and the president, what will happen in the House of Representatives? The Senate, most of the experts here in Washington believe that there will be the 60 votes they need in the Senate, if, in fact, they do need that super-majority. The question is, will the House of Representatives, where there's a significant Republican majority, if it includes anything that could be deemed a tax increase, that legislation could be in trouble.

MALVEAUX: And that's right, Wolf, because you're talking about the president saying, Look, you know, I'm only going to go after the wealthiest Americans, families making more than $250,000, when it comes to a tax increase or allowing their cuts to expire. I'm only going to go after those who are flying the corporate jets, the tax loopholes that they have. The president is going to try to make that case, that these are limited in scope, that this is a small group of the American public that's really going to be impacted when it comes to making those sacrifices.

I want to go to our chief White House correspondent, Jessica Yellin. She's actually in the briefing room where the president is going to be speaking shortly.

And Jessica, clearly, this seems to be a way for the president to use the bully pulpit to get his message out. He's in these back-door negotiations. What do we expect for him to say when he goes before the cameras?

YELLIN: Sorry Suzanne -- essentially calling for, asking again, as we've heard him in recent days, to have leaders come together, find a compromise solution, and not, as he's said in the past, kick the can down the road.

We know that after yesterday's meeting, he asked leaders to come back today with something that, in their view, could pass both Houses of Congress. So he wants to see some specifics. So in general, the point of today's press conference is to keep up the pressure in public for them to cut some kind of a deal in private. And he is going to sell his message to us so that he can -- he can keep the pressure on them to do the business they need to get done starting this afternoon, Suzanne.

MALVEAUX: OK. And Jessica, are you able to hear me now?

YELLIN: I can hear you now.

MALVEAUX: OK, I want to ask you, why do you think the president believes that negotiating in public here, holding this press conference, is going to be an effective way of changing people's minds or putting pressure on members of Congress?

YELLIN: Because it's no secret that Americans in general are incredibly frustrated with all the leadership in Washington for just not getting something done. They're not blaming Democrats or Republicans, it's just a general distaste for the process.

And this just looks like more -- it is more gridlock, and everybody ends up getting blamed to some extent for the lack of momentum here.

Americans in general, if you look at the polling and if you go out there and just talk to folks, want these leaders to be focusing on jobs, not on the debt. They want to be done with the debt and working on the next step. So the more the president is out there talking about, Let's get this done, let's resolve this so we can move on to the next thing, there is the assumption that maybe that can keep some pressure on all leaders to stay focused.

But obviously, anyone in politics knows that already. It's just part of the ongoing dynamic that happens here in Washington. He has the bully pulpit. Why not use what you've got?

MALVEAUX: Absolutely. And I guess the sausage making happens, as well, behind the scenes. You know, do we think that he's going to go back to the negotiating table? What happens after this public appeal? What does he do next?

YELLIN: There's a meeting at 2:00 o'clock this afternoon. As I said, they have -- leadership has been asked to come back with specifics. So the big question today is, will they be looking at that medium- sized deal and will they have enough details on both sides to get something done?

There is not a lot of certainty that they can cut that medium-sized deal. There's not a lot of certainty that they can cut that big deal. And the president has said he won't take a short-term deal. But they have to have a deal. So what is it?

There's a lot of uncertainty right now. So it's all very unstable, very much up in the air. And everybody is playing for their negotiating position right now. And the president is using the leverage he has to keep up as much pressure as he can in advance of the meeting today.

Gloria, you know, it's interesting. The president is going to be in the briefing room, which is sort of the day-to-day briefing operation. He's not in the East Room, where there would be a dramatic announcement, if there were a news conference in the East Room. But this is just sort of an update.

Are you surprised that in the middle of these tough negotiations he's decided to go public like this to try to put pressure on the Republicans? .

GLORIA BORGER, CNN SR. POLITICAL ANALYST: Well, I'm not surprised. I find it interesting that before they go back to meet at 2:00 in the afternoon, as Jess said, that he is coming out here to kind of talk about the state of play.

And the president can go directly to the American people, say, look, we put this on the table. What will be interesting to watch, Wolf, is exactly how he describes the state of the negotiations, because when we know -- we know from watching this. When things fall apart, the president will tell you because he is going to back into his political corner.

If things are still very viable, you'll hear a different tone from the president. And we have to watch and see what that tone is going to be and whether he says we are within reach of a deal.

BLITZER: You know, one thing I've been watching very closely, John -- and help us better appreciate this -- the relationship between the House Speaker, John Boehner, and the number two Republican in the House, the majority leader, Eric Cantor. Because they don't always seem to be on the same page.

KING: No. They seem to not always to be on the same page because they are not always on the same page.

Mr. Cantor is viewed as the more conservative, viewed as the more willing to have a confrontation with the president. A different responsibility.

John Boehner is the Speaker of the House. With that title -- yes, he's a Republican -- with that title comes responsibility. He's third in line to the presidency.

He is, as Gloria noted, by default, a career legislator, a guy who has cut deals on big education bills in the past with the late Senator Ted Kennedy, for example. So his DNA is try to get a deal.

Mr. Cantor is more thinking about confrontation, protecting the Tea Party base, building up his own stature within the Republican conference. There's a bit of a rivalry. There's a partnership. He's the number two.

BLITZER: So you don't think it's just a good cop/bad cop show, kind of negotiating ploy?

KING: No. It can be -- that can be done sometimes. And in the end, they will have to get together. In the end, you would expect them to get together.

But there is a bit of a rivalry there. There's no question. Mr. Boehner is the Speaker, Mr. Cantor is the number two as the majority leader. But Eric Cantor is always thinking about the next generation move, and he tries to work -- because sometimes it helps. It helps the Speaker, though, even though there is a rivalry. The rank and file who think they need to blow off some steam can go to Mr. Cantor, and in the end they'll make peace.

But this is a fascinating moment in the Republican Party, Wolf. There is a presidential campaign going on there. They're trying to pick a new leader there.

In Congress, this is the first big issue, huge issue with the new Republicans. When they cut the tax deal, when they did all the business in the lame-duck session, these new guys weren't here yet. So this is a test. It is a defining moment, and that relationship, Cantor-Boehner, is part of this big moment.

BORGER: You know, and the presidential campaign is really a complicating factor here, because you have the presidential candidates out there -- let me quote one of them, Tim Pawlenty, who said, "I hope and pray and believe they should not raise the debt ceiling."

So you have a top-tier presidential candidate out there in the Republican Party saying, no way --

KING: Senator Barack Obama said that once.

BORGER: -- that's right -- don't do it. And you have Michele Bachmann talking about how they shouldn't do it, that you need to attach it to a balanced budget amendment. So these are all complicating factors that play into the Speaker's thinking and, as John was saying, into Eric Cantor's thinking, because he's got to count those votes. And I guarantee you, Democrats in the House will not vote for this unless a majority of the Republicans vote for it. They've got to see that.

BLITZER: And as we go back to Suzanne, the other fascinating relationship that is emerging is right now is on the Democratic side between the president of the United States and the former Speaker of the House, Nancy Pelosi. They are not necessarily on the same page, haven't been on the same page on other issues like Libya, for example, Afghanistan, Iraq, for that matter. Steny Hoyer, the number two Democrat in the House, he is more in line with the president, I think it's fair to say, than Nancy Pelosi is.

MALVEAUX: You're actually seeing that split within the Democratic Party. It's a challenge that President Obama has in really kind of rallying his own troops.

Wolf, I want to bring some breaking news to our viewers here on another story. The British media reporting -- including the BBC -- reporting that former British prime minister Gordon Brown, he's going to be making a statement very shortly.

He is claiming that his phone and bank account were hacked by "The Sunday Times." That's another Murdoch newspaper.

This is going to be a statement that he is making very shortly. It comes after, as you know, the "News of the World," another Murdoch publication, was discontinued on Sunday for allegedly hacking phones and other private information from war dead, from those who are celebrities, and numerous other people who fell victim to that publication.

Well, now another Murdoch publication, allegedly, hacking phone and bank accounts of the former prime minister, Gordon Brown. That is according to Gordon Brown and his office. And he's going to be releasing that statement very shortly. We'll see just how big this ends up being.

But, clearly, it's a significant development in light of what we have seen just Sunday, just yesterday, when the "News of the World" decided to shut down because of its own alleged bad behavior.

I want to go back to following what President Obama is going to be saying very shortly out of the White House Briefing Room. Obviously, bringing us up to speed about these negotiations that are taking place, Democrats, Republicans, and the president, over raising the debt limit, the debt ceiling, and what this means in terms of budget cuts, what it means in terms of tax hikes, and where they are in this deal.

I want to bring back our financial analyst, Ali Velshi.

And Ali, there is something that is very curious here, because we have heard from the treasury secretary, Geithner, and we have also heard from the Republicans, too, saying that, look, job numbers, unemployment, even worse last month, June. It actually went up. And debt ceiling talks, really important.

Both of them linking it here. And they don't really necessarily have to do with one another.

Do we think that we are going to hear from the president -- is he going to make a connection between people wanting more jobs and actually dealing with the debt ceiling? Are these two connected?

VELSHI: Yes. Not really. And both sides have connected it.

The president, on Friday, made a speech after the jobs numbers came out, saying this just proves they have to get a deal on the debt ceiling and the debt. Republicans saying this is just evidence that the administration's policies are not working and why we need to cut taxes to create jobs.

No, not really. They are separate issues.

We have slow growth in jobs unrelated to the debt. The slow growth is related to the fact that we have a lot of unemployed people who are not creating more demand. So employment is a chicken and the egg sort of thing. You've got to have more people working, creating more demand with the money that they earn that causes greater employment.

That is the single biggest issue that is plaguing us right now. And a lot of commentators, Suzanne, are saying that, really, that, in the short term, is the biggest problem and would reap the greatest rewards if we were to solve it and somehow create more jobs.

Now, what the Republicans are saying is, can you create incentives through tax credits to say, we need jobs in these areas geographically or these industries? Can you give people tax credits to create those jobs?

The reality is it's expensive to start a business and to hire people. If there can be reductions in the cost of hiring people -- President Obama has suggested cuts in the payroll taxes -- that could stimulate job growth immediately. But it's highly specific.

It's not across-the-board tax cuts that create jobs, Suzanne. It's highly specific targeted tax cuts which could become part of this deal to increase the debt ceiling that Republicans and Democrats are working on.

MALVEAUX: And the Chinese, do they have anything? What is their stake in this debate here? Obviously, they are holding on to our debt.

VELSHI: Well, OK. So, the day that this -- this August 2nd day that Treasury Secretary Tim Geithner says we're not going to be able to pay all our bills, somebody -- generally speaking, the treasury secretary -- if we don't have a deal is going to sit there with a pile of bills and say this one is Social Security, this one is military, this one is debt to the Chinese. Which ones get paid?

The Chinese are the biggest holders of foreign debt in the United States. If they think there is any risk to the money that they are getting paid, they could act in a way that is adverse to the U.S. dollar and cause us to pay more interest on the money we borrow. So the Chinese are watching this very carefully.

I will tell you though, international markets right now are betting that a deal is getting done. We have not seen any adverse reaction yet. If it looks like there might be one, you will start to see markets get jittery.

MALVEAUX: Some people have argued that if August 2nd comes, that the federal government would at least be able to pay some bills, but not others. For some services, but not others.

VELSHI: Sure.

MALVEAUX: The president says that doesn't make any sense. You can't, like, give up paying Social Security payments and then, oh, decide to turn on the lights at the Pentagon. I mean, how does that work? Is that even possible?

VELSHI: Where that would work is if you generally think you would have enough money to pay all your bills, you just may not have it all this month. It might be -- so you're putting some things off.

In a country that has to borrow so much of the money that it spends, this becomes problematic, because even if you end up paying this pile of bills, everybody knows you are now running out of money and you're not fully committed to paying everything. So your cost of borrowing from that day forward is likely to increase.

We don't know 100 percent that it will, but is likely to increase. And that's where it becomes a problem. Once you start to default, interest rates spike.

Right now, the United States has enjoyed a reputation as the world's most trustworthy payer of its obligations in the history of the world. That's what people are worried about us risking. And the major ratings agencies have said that if they don't come to an agreement in Washington, they could downgrade U.S. debt, and that will mean it becomes more expensive to buy -- for the U.S. to borrow money to pay its obligations. And that, by the way, Suzanne, then trickles down to home loans, auto loans, school loans, personal loans, and business loans.

MALVEAUX: All right. Ali Velshi, thank you so much.

Ali Velshi, as well as Wolf Blitzer, my colleagues in Washington. We're all awaiting this press conference, President Obama on the talks that are taking place at the White House regarding the debt ceiling, the budget, and potentially tax hikes and major cuts.

More after the break.

(COMMERCIAL BREAK)

(BEGIN COVERAGE)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: Hello everybody.

I want to give a quick update on what's happening with the debt negotiations, provide my perspective, and then I'm going to take a few questions.

As all of you know, I met with congressional leaders yesterday. We're going to be meeting again today, and we're going to meet every single day until we get this thing resolved.

The good news is that all the leaders continue to believe, rightly, that it is not acceptable for us not to raise the debt ceiling and to allow the U.S. government to default. We cannot threaten the United States' full faith and credit for the first time in our history.

We still have a lot of work to do, though, to get this problem solved. And so let me just make a couple of points.

First of all, all of us agree that we should use this opportunity to do something meaningful on debt and deficits.

OBAMA: And the reports that have been out there have been largely accurate that Speaker Boehner and myself had been in a series of conversations about doing the biggest deal possible so that we could actually resolve our debt and our deficit challenge for a long stretch of time. And I want to say I appreciate Speaker Boehner's good-faith efforts on that front. What I emphasized to the broader group of congressional leaders yesterday is now is the time to deal with these issues. If not now, when? I've been hearing from my Republican friends for quite some time that it is a moral imperative for us to tackle our debt and our deficits in a serious way.

OBAMA: I've been hearing from them that this is one of the things that's creating uncertainty and holding back investment on the part of the business community.

And so, what I've said to them is, "Let's go."

And it is possible for us to construct a package that would be balanced, would share sacrifice, would involve both parties taking on their sacred cows, would involve some meaningful changes to Medicare, Social Security and Medicaid, that would preserve the integrity of the programs and keep our sacred trust with our seniors but make sure those programs were there for not just this generation but for the next generation, that is it possible for us to bring in revenues in a way that does not impede our current recovery, but is fair and balanced.

OBAMA: We have agreed to a series of spending cuts that will make the government leaner, meaner, more effective, more efficient, and give taxpayers a greater bang for their buck. That includes defense spending health. That includes health spending. It includes some programs that I like very much and we'd -- be nice to have, but that we can't afford right now.

And if you look at this overall package, we could achieve a situation in which our deficits were at a manageable level and our debt levels were stabilized and the economy as a whole I think would -- would benefit from that.

OBAMA: More -- moreover, I think it would give the American people enormous confidence that this town can actually do something once in a while, that we can defy the expectations that we're always thinking in terms of short-term politics and the next election, and every once in a while, we break out of that and we do what's right for the country.

So I continue to push congressional leaders for the largest possible deal. And there's going to be resistance. There is, frankly, resistance on my side to do anything on entitlements. There is strong resistance on the Republican side to do anything on revenues.

But if each side takes a maximalist position, if each side wants 100 percent of what its, you know, ideological predispositions are, then we can't get anything done.

And I think the American people want to see something done. They feel a sense of urgency, both about the breakdown in our political process and also about the situation in our economy.

So what I've said to the leaders is, bring back to me some ideas that you think can get the necessary number of votes in the House and in the Senate. I'm happy to consider all options, all alternatives that they're looking at. The things that I will not consider are a 30-day or a 60-day or a 90-day or a 180-day temporary stopgap resolution to this problem.

OBAMA: This is the United States of America and, you know, we don't manage our affairs in three-month increments. You know, we don't risk U.S. default on our obligations because we can't put politics aside. So I've -- I've been very clear to them. We're going to resolve this and we're going to resolve this for a reasonable period of time and we're going to resolve it in a serious way.

And my hope is -- is that as a consequence of negotiations that take place today, tomorrow, the next day and through next weekend if necessary that we're going to come up with a plan that solves our short-term debt and deficit problems, avoids default, stabilizes the economy, and proves to the American people that we can actually get things done in this -- in this country and in this town.

OBAMA: All right. With that, I'm going to take some questions, starting with Ben Feller (ph).

QUESTION: Thank you very much, Mr. President.

Two quick topics.

Given that you're running out of time, can you explain what is your plan for where these talks go if Republicans continue to oppose any tax increases as they have adamantly said that they will?

And secondly, on your point about no short-term stopgap measure, if it came down to that and Congress went that route, I know you're opposed to it, but would you veto it?

OBAMA: I will not sign a 30-day or a 60-day or a 90-day extension. That -- that is just not an acceptable approach.

And if we think it's going to be hard -- if we think it's hard now, imagine how these guys are going to be thinking six months from now in the middle of election season when they're all up. It's not going to get easier; it's going to get harder. So we might as well do it now, pull off the Band-Aid, eat our peas.

(LAUGHTER)

You know, now is the time to do it.

OBAMA: If not now, when? We keep on talking about this stuff, and, you know, we have these high-minded pronouncements about how we've got to get control of the deficit and how we owe it to our children and our grandchildren. Well, let's step up. Let's do it.

I'm prepared to do it. I'm prepared to take on significant heat from my party to get something done. And I expect the other side should be willing to do the same thing if they mean what they say, that this is important.

And let me just then comment on this whole issue of tax increases, because there's been a lot of information floating around there. I want to be crystal clear: Nobody has talked about increasing taxes now, nobody has talked about increases -- increasing taxes next year.

What we have talked about is that starting in 2013 that we have gotten rid of some of these egregious loopholes that are benefiting corporate jet owners or oil companies at a time where they're making billions of dollars of profits.

What we have said is, as part of a broader package, we should have revenues.

OBAMA: And the best place to get those revenues are from folks like me who have been extraordinarily fortunate, and that millionaires and billionaires can afford to pay a little bit more, going back to the Bush tax rates.

And, what I've also said to the Republicans is, if you don't like that formulation, then I'm happy to work with you on tax reform that could potentially lower everybody's rates and broaden the base, as long as that package was sufficiently progressive so that we weren't balancing the budget on the backs of middle-class families and working-class families, and we weren't letting hedge fund managers or authors of best-selling books off the hook.

That is a reasonable proposition.

So when -- when you hear folks saying, "Well, you know, the president shouldn't want, you know, massive, job-killing tax increases when the economy's this week, nobody's looking to raise taxes right now. We're talking about potentially 2013 and the out-years.

In fact, the only proposition that's out there about raising taxes next year would be if we don't renew the payroll tax cut that we passed in December, and I'm in favor of renewing is for next year as well. But there have been some Republicans who've said we may not renew it.

And if we don't renew that, then the $1,000 that's been going to a typical American family this year as a consequence of the tax cut that I worked with the Republicans and passed in December, that lapses. That could weaken the economy.

OBAMA: So I have bent over backwards to work with the Republicans to try to come up with a formulation that doesn't require them to vote sometime in the next month to increase taxes. What I've said is, let's identify a revenue package that makes sense, that is commensurate with the sacrifices we're asking other people to make, and then I'm happy to work with you to figure out how else we might do it.

QUESTION: Do you see any path to a deal if they don't budge on taxes?

OBAMA: I do not see a path to a deal if they don't budge, period. I mean, if the basic proposition is it's my way or the highway, then we're probably not going to get something done because we've got divided government. We've got Democrats controlling the Senate. OBAMA: We probably are going to need Democratic votes in the House for any package that could possibly pass. And so if in fact Mitch McConnell and John Boehner are sincere, and I believe they are, that they don't want to see the U.S. government default, then they're going to have to compromise just like Democrats are going to have to compromise; just like I have shown myself willing to compromise.

QUESTION: Thank you, Mr. President.

You've said that everybody in the room is willing to do what they have to do, wants to get something done by August 2nd. But isn't the problem the people who aren't in the room, and in particular Republican presidential candidates, Republican tea partyers on the Hill, and the American public?

The latest CBS News polls show that only 24 percent of Americans said you should raise the debt limit to avoid an economic catastrophe. There are still 69 percent who oppose raising the debt limit.

So is it the problem that you and others have failed to convince the American people that we have a crisis here and how are you going to change that?

OBAMA: Well, let me distinguish between professional politicians and the public at large. You know, the public is not paying close attention to the ins and outs of how a treasury auction goes. They shouldn't.

OBAMA: They're worrying about their family; they're worrying about their jobs; they're worrying about their neighborhood. They've got a lot of other things on their plate.

We're paid to worry about it.

I think, depending on how you phrased the question, if you said to the American people, "Is it a good idea for the United States not to pay its bills and potentially create another recession that could throw millions of more people out of work," I feel pretty confident I can get a majority on my side on that one.

And that's the fact. If we don't raise the debt ceiling and we see a crisis of confidence in the markets, and suddenly interest rates are going up significantly and everybody is paying higher interest rates on their car loans, on their mortgages, on their credit cards, and that's sucking up a whole bunch of additional money out of the pockets of the American people, I promise you, they won't like that.

Now, I will say that some of the professional politicians know better. And for them to say that we shouldn't be raising the debt ceiling is irresponsible. They know better.

OBAMA: And, you know, this -- this is not something that, you know, I am making up. This is not something that Tim Geithner is making up. We -- we're not out here trying to use this as a means of doing all these really tough political things. I'd -- I'd rather be talking about stuff that, you know, everybody welcomes, like new programs or, you know, the NFL season getting resolved or, you know...

(LAUGHTER)

Unfortunately, this is what's on our plate. It's before us right now. And we've gotta deal with it.

So, what -- what -- what you're right about, I think, is is that the leaders in the room here at a certain point have to step up and do the right thing regardless of the voices in our respective parties that are trying to undermine that effort.

You know, I have a stake in John Boehner successfully persuading his caucus that this is the right thing to do, just like he has a stake in seeing me successfully persuading the Democratic Party that we should take on these problems that we've been talking about for too long but haven't been doing anything about.

QUESTION: Do you think he'll come back to the $4 trillion deal?

OBAMA: I think Speaker Boehner has been very sincere about trying to do something big. I think he'd like to do something big.

His politics within his caucus are very difficult, you're right.

OBAMA: And this is part of the problem with a political process where folks are rewarded for saying irresponsible things to win elections or obtain short-term political gain. When we actually are in a position to try to do something hard, you know, we haven't always laid the groundwork for it.

And I think that, you know, it's going to take some work on his side. But look, it's also going to take some work on our side in order to get this thing done.

I mean, the vast majority of Democrats on Capitol Hill would prefer not to have to do anything on entitlements, would prefer, frankly, not to have to do anything on some of these debt and deficit problems. And I'm sympathetic to their concerns, because they're looking after folks who are already hurting and already vulnerable and there are a lot of folks out there and seniors who are dependent on some of these programs.

OBAMA: And what I've tried to explain to them is, number one, if you look at the numbers, then Medicare, in particular, will run out of money, and we will not be able to sustain that program, no matter how much taxes go up.

I mean, it's not an option for us to just sit by and do nothing.

And if you're a progressive who cares about the integrity of Social Security and Medicare and Medicaid, and believes that it is part of what makes our country great, that we look after our seniors and we look after the most vulnerable, then we have an obligation to make sure that we make those changes that are required to make it sustainable over the long term. And if you're a progressive that cares about investments in Head Start and student loan programs and medical research and infrastructure, we're not going to be able to make progress on those areas if we haven't gotten our fiscal house in order.

So, you know, the argument I'm making to my party is the values we care about -- making sure that everybody in this country has a shot at the American dream and everybody's out there with the opportunity to succeed if they work hard and live a responsible live, and that government has a role to play in providing some of that opportunity through things like student loans and making sure that our roads and highways and airports are functioning and making sure that we're investing in research and development for the high-tech jobs of the future, if you care about those things, then you've got to be interested in figuring out how do we pay for that in a responsible way.

OBAMA: And so, yeah, we're going to have a sales job. This is -- this is not pleasant. You know, it is -- it is hard to persuade people to do hard stuff that entails trimming benefits and increasing revenues. But the reason we've got a problem right now is people keep on avoiding hard things. And I think now's the time for us to go ahead and take it on.

QUESTION: Thank you, Mr. President.

People are talking about balanced, shared sacrifice. But in the $4 trillion deal that you're talking about, roughly, it seems to (inaudible) now at about four to one spending to taxes. We're talking about $800 billion in taxes, roughly. That doesn't seem very fair to some Democrats.

I'm wondering if you could clarify why we're at that level; and also if you could clarify your Social Security positions. Would any of the money from Social Security, even from just changed CPI, go toward the deficit as opposed to back into trust (inaudible).

OBAMA: With respect to Social Security, Social Security is not the source of our deficit problems.

OBAMA: Social Security, if is -- if it is part of a package, would be an issue of how do we make sure Social Security extends its life and is strengthened?

So, you know, the reason to do Social Security is to strengthen Social Security to make sure that those benefits are there for seniors in the out-years.

And the reason to include that potentially in this package is, if you're going to take a bunch of tough votes, you might as well do it now, as -- as opposed to trying to muster up the political will to get something done further down in the future.

With respect to a balanced package, is -- is the package that we're talking about exactly what I would want? No. You know, I might want more revenues and fewer cuts to programs that benefit, you know, middle-class families that are trying to send their kids to college, or benefit, you know, all of us, because we're investing more in medical research.

So I make no claims that somehow the position that Speaker Boehner and I discussed reflects 100 percent of what I want. But that's the point: My point is is that I'm willing to move in their direction in order to get something done.

And that's what compromise entails. You know, we have a system of government in which everybody's got to give a little bit.

OBAMA: Now, what I will say is, is that the revenue components that we've discussed would be significant and would target folks who can most afford it.

And if we don't do any revenue, because you may hear the argument that, you know, why not just go ahead and do all the cuts and we can debate the revenue issues in the election, right, you'll hear that from some Republicans, the problem is, is that if you don't do the revenues, then to get the same amount of savings you've got to have more cuts, which means that it's seniors or it's poor kids or it's medical researchers or it's, you know, our infrastructure that suffers.

And it -- you know, I do not want and I will not accept a deal in which I am asked to do nothing, in fact I'm able to keep hundreds of thousands of dollars in additional income that I don't need, while a parent out there who's struggling to figure out how to send their kid to college suddenly finds that they've got a couple thousand dollars less in grants or student loans.

OBAMA: That's what the revenue debate's about. It's not because I want to raise revenues for the -- for the sake of raising revenues, or I've got some grand ambition to create a bigger government. It's because if we're going to actually solve the problem, there are a finite number of ways to do it.

And if you don't have revenues, it means you are putting more of a burden on the people who can least afford it. And that's not fair. And I think the American people agree with me on that.

QUESTION: Thank you, Mr. President.

With unemployment now at 9.2 percent and a large chunk of those lost jobs coming from the public sector, is now really a good time to cut trillions of dollars in spending? How will this (inaudible) create jobs?

And then, to piggy-back on the Social Security question, what do you say to members of your own party who say it doesn't (inaudible) the deficit; let's consider it, but not in this context (inaudible)?

OBAMA: Our biggest priority in this administration is getting the economy back on track and putting people back to work.

OBAMA: Now, you know, without relitigating the past, I am absolutely convinced and the vast majority of economists are convinced that the steps we took in the Recovery Act saved millions of people their jobs or created a whole bunch of jobs.

And part of the evidence of that is as you see what happens with the Recovery Act phasing out. You know, when I came into office and budgets were hemorrhaging at the state level, part of the Recovery Act was giving states help so they wouldn't have to lay off teachers, police officers, firefighters.

As we've seen that federal support for states diminish, you've seen the biggest jobs losses in the public sector -- teachers, police officers, firefighters losing their jobs.

So my strong preference would be for us to figure out ways that we can continue to provide help across the board, but I'm operating within some political constraints here, 'cause whatever I do has to go through the House of Representatives.

OBAMA: What that means, then, is is that among the options that are available to us is, for example, the payroll tax cut, which might not be exactly the kind of program that I would design in order to boost employment, but does make a difference because it puts money in the pockets of people who are then spending it at businesses large and small. That gives them more customers, increases demand and it gives businesses a greater incentive to hire. And that would be, for example, a component of this overall package.

Unemployment benefits, again, puts money in the pockets of folks who are out there, you know, knocking on doors trying to find a job every day. Giving them those resources, that puts more money into the economy and that potentially improves it -- improves the climate for businesses to want to hire.

So, you know, as part of a component of a deal, I think it's very important for us to look at what are the steps we can take short-term in order to put folks back to work.

I am not somebody who believes that just because we solve the deficit and debt problems short-term, medium-term or long-term, that that automatically solves the unemployment problem. I think we're still going to have to do a bunch of stuff, including, for example, trade deals that are before Congress right now that could add tens of thousands of jobs.

OBAMA: Republicans gave me this list at the -- at the beginning of this year as a priority, something that they thought they could do. Now I'm ready to do it and so far we haven't gotten the kind of movement that I would have expected.

We've got the potential to create an infrastructure bank that could put construction workers to work right now rebuilding our roads and our bridges and our -- our vital infrastructure all across the country.

So those are still areas where I think we can make enormous progress. I do think that if the country as a whole sees Washington act responsibly, compromises being made, the deficit and debt being dealt with for 10, 15, 20 years, that that will help with businesses feeling more confident about aggressively investing in this country, foreign investors saying America has got its act together and are willing to invest. And so it can have a positive impact in overall growth and employment.

OBAMA: It's not the only solution. We're still going to have to have a strong jobs agenda, but it is part of a solution. I might add, it is the primary solution that the Republicans have offered when it comes to jobs.

They keep on going out there and saying, you know, "Mr. President, what are you doing about jobs?" And when you ask them, "Well, what would you do?" "We've got to get government spending under control. We've got to get our deficits under control."

So I say, "OK, let's go." Where are they?

I mean this is -- this is what they claim would be the single biggest boost to business certainty and confidence? So what's the hold-up?

With respect to Social Security, as I indicated earlier, making changes to these programs is so difficult that this may be an opportunity for us to go ahead and do something smart that strengthens Social Security and gives not just this generation, but future generations, the opportunity to -- to say this thing's going to be in there for the long haul.

Now, that may not be possible and you're absolutely right that, as I said, Social Security is not the primary driver of our long-term deficits and debt. On the other hand, we do want to make sure that Social Security is going to be there for next generations. And if there is a reasonable deal to be had on it, it is one that I'm willing to pursue.

QUESTION: (inaudible) with Social Security, like raising the retirement age, (inaudible) are those too big a chunks (inaudible)?

OBAMA: I'm probably not going to get into the details right now of negotiations. I might enjoy negotiating with you, but I don't know how much juice you've got in the Republican caucus.

(LAUGHTER)

That's what I figured.

All right, (inaudible) question?

QUESTION: Thank you, Mr. President.

Have you talked -- economists -- you've said that economists have agreed that a deal needs to be made. Have you worked with U.S. business leaders at all to lobby Congress to raise the debt ceiling? And, if so, who have you are you talking to? (CROSSTALK)

OBAMA: I have spoken extensively to business leaders. And, I'll be honest with you, I think that business leaders in the abstract want to see a resolution to this problem.

What I've found is that they are somewhat hesitant to weigh in on some of these issues, even if they're willing to say something privately to me, partly because they've got a whole bunch of business pending before Congress, and they don't want to make anybody mad, you know.

So this is a problem of our politics and our politicians, but it's not exclusively a problem of our politics and our politicians.

OBAMA: I mean, the business community's a lot like everybody else, which is we want to cut everybody else's stuff and we want to keep our stuff. We want to cut our taxes, but if you want to raise revenue with somebody else's taxes, that's OK.

And that kind of mindset is why we never get the problem solved.

There have been business leaders, like Warren Buffett, who I think have spoken out forcefully on this issue. I think some of the folks who participated in the Bowles-Simpson commission made very clear that they would agree to a balanced approach, even if it meant for them individually that they were seeing slightly higher taxes on their income, given that their -- I think the average CEO, if I'm not mistaken, saw a 23 percent raise this past year while the average worker saw a zero to 1 percent raise last year.

So, I think that there are a lot of well-meaning business people out there who recognize the need to make something happen. But I think that they've been hesitant to be as -- as straightforward as I'd like when it says, "This is what a balanced package means. It means that we've got some spending cuts. It means that we've got some increased revenue. And it means that we're taking on some of the drivers of our long-term debt and deficits."

QUESTION: And can you say as the clock ticks down whether or not the administration is...

OBAMA: I'm sorry?

QUESTION: Can you say, as the clock ticks down, whether or not the administration is working on any sort of contingency plans if things don't happen by August 2nd?

OBAMA: We are going to get this done by August 2nd.

QUESTION: Mr. President, to follow on Chip's question, you said that the speaker faces tough politics in his caucus. Do you have complete confidence that he can deliver the votes on anything that he agrees to? Is he in control of his caucus?

OBAMA: You know, that's a question for the speaker, not a question for me. My experience with John Boehner is -- has been good. I think he's a good man who wants to do right by the country. I think that it's a -- as Chip alluded to, the politics that swept him into the speakership were good for a midterm election, they're tough for governing.

And part of what the Republican Caucus generally needs to recognize is that American democracy works when people listen to each other, we're willing to give each other the benefit of the doubt, we assume the patriotism and good intentions of the other side, and we're willing to make some sensible compromises to solve big problems.

OBAMA: And I think that there are members of that caucus who haven't fully arrived at that realization yet.

QUESTION: So your confidence in him wasn't shaken by him walking away from the big deal he said he wanted?

OBAMA: You know, these things are a tough process. And, look, in fairness, a big deal would require a lot of work on the part of Harry Reid and Nancy Pelosi and myself to bring Democrats along.

But the point is is if everybody gets in the boat at the same time, it doesn't tip over. I think that that was Bob Dole's famous comment after striking a deal with the president and Mr. Gingrich back in the '90s. And that is always the case when it comes to difficult, but important tasks like this.

Last question.

QUESTION: Mr. President, hi. I want to revisit the issue of sacrifice.

QUESTION: In 2009, you said that expect the worst economy; we have not seen the worst yet. And now that these budget cuts are looming, you have minorities, the poor, the elderly, as well as people who are scared of losing jobs, fearful.

And also, what say you about (inaudible) bill, the Debt-Free America Act? Do you support that? Or are you supporting the Republican bill that (inaudible) modeled after (inaudible)?

OBAMA: Well, I'm not going to comment on a particular bill right now. Let me -- let me speak to the broader point that you're asking about, April.

This recession has been hard on everybody, but obviously it's harder on folks who've got less. And the thing that I am obsessed with and have been since I came into office is all those families out there who are doing the right things every single day, who are looking after their families, who are just struggling to keep up, and just feel like they're falling behind no matter how hard they work.

OBAMA: I got a letter from past week from a woman who -- her husband had lost his job, had, you know, pounded the pavement, finally found a job. They felt like things were stabilizing for a few months. Six months later, he lost the second job. Now, they're back looking again and trying to figure out how are they ever going to make ends meet. And there're just, you know, hundreds of thousands of folks out there who really have -- have seen as tough of economy as -- as we've seen in our lifetimes.

Now, we took very aggressive steps when I first came into office to yank the economy out of a potential Great Depression and stabilize it. And we were largely successful in stabilizing it, but we stabilized it at a level where unemployment is still too high and the economy is not growing fast enough to make up for all the jobs that were lost before I took office and the few months after I took office.

So, this unemployment rate has been really stubborn. There are a couple of ways that we can solve that.

Number one is to make sure that the overall economy is growing.

OBAMA: And so we have continued to take a series of steps to make sure that there's money in people's pockets that they can go out there and spend. That's what these payroll tax cuts were about.

We've taken a number of steps to make sure that businesses are willing to invest. And that's what the small business tax cuts and some of the tax breaks for companies that are willing to invest in plants and equipment and zero capital gains for small businesses, that's what that was all about, was giving businesses more incentive to invest.

We have worked to make sure that the training programs that are out there for folks who are having to shift from jobs that may not exist anymore so that they can get the training they need for the jobs that do exist, that these are improved and sharpened. We have put forward a series of proposals to make sure that regulations that may be unnecessary and are hampering some businesses from investing, that we are examining all those for their costs and their benefits.

OBAMA: And if they are not providing the kinds of benefits in terms of the public health and clean air and clean water and worker safety that have been promised, then we should get rid of some of those regulations.

So we've been looking at the whole menu of steps that can be taken.

We are now in a situation where because the economy has moved slower than we wanted, because of the deficits and debt that result from the recession and the crisis, that, you know, taking an approach that costs trillions of dollars is not an option. We don't have that kind of money right now.

What we can do is to solve this underlying debt and deficit problem for a long period of time so that then we can get back to having a conversation about, all right, since we now have solved this problem, that's not -- no longer what's hampering economic growth, that's not feeding business uncertainty, everybody feels that the ground is stable under our feet, are there some strategies that we could pursue that would really focus on some targeted job growth? Infrastructure being a primary example. I mean, the infrastructure bank that we've proposed is relatively small. But could we imagine a project where we're rebuilding roads and bridges and ports and schools and broadband lines and smart grids, and taken all those construction workers and putting them to work right now?

I -- I can imagine a very aggressive program like that that I think the American people would rally around and it would be good for the economy not just next year or the year after, but for the next 20 or 30 years. But we can't even have that conversation if people feel as if we don't have our fiscal house in order.

So the idea here is let's act now. Let's -- let's get this problem off the table. And then with -- with some firm footing, with a solid fiscal situation, we will then be a in a position to make the kind of investments that I think are going to be necessary to win the future.

So this is not a right or left, conservative-liberal situation. This is how do we operate in a smart way, understanding that we've got some short-term challenges and some long-term challenges. If we can solve some of those long-term challenges, that frees up some of our energies to be able to deal with some of these short-term ones as well.

All right? Thank you very much, everybody.

(END COVERAGE)

BLITZER: And so the President of the United States wraps up a news conference. This, the second one within two weeks. The president answering lots of questions about the debt ceiling that has to be raised by August 2nd, otherwise if you believe the Treasury Department, there will be enormous, enormous problems for the U.S. economy, indeed, for the global economy. The stakes, obviously, very significant.

Suzanne Malveaux is here.

Suzanne, the president made it clear he will not sign any short-term stop gap measure, in his words, no temporary 30, 60, 90, even 120-day deal. He also said he fully expect some sort of deal by August 2nd, although it's obvious there are enormous problems getting to that August 2nd deadline.

MALVEAUX: I thought it was notable the last question where the president really addressed the American people and he acknowledged that it was tough time for a lot of folks but it was even harder for those that have less.

I think a lot of people want to understand what does the debate mean when it comes to them? And he outlined it simply as a problem that has to be solved, it has to be resolved by August 2nd, before you can deal with the kinds of practical matters, like, how do people get jobs, how do you put people back to work.

I want to bring in our chief White House correspondent Jessica Yellin. She was in the room, in the briefing.

And Jessica, I thought the last question was great, are we going to see you again tomorrow, because that is the question -- what is next here?

The president laid out -- drew a line in the sand saying, as Wolf mentioned, he's not going to sign stop measure, any short-term measure. He wants the grand deal on the table.

Still, very questionable whether or not he's going to get it even from his own party.

YELLIN: A couple points that I'd make, Suzanne. First of all, as we expected, the president did once again affirm, as you say, he wanted this grand deal. He did say when asked, would you block any sort term deal, we've been told that he told congressional leaders he would veto any short term deal. He said he opposes the 30, 60 or 90-day deal.

And I -- we have to go back and check the tape. I heard him say that twice, I think. That leaves something of an open question, could he accept something else that falls short of going through the November 2012 elections, which is the outer limit he had set previously. I just don't know. So that was a question that I leave this press conference wondering and I'll try to get an answer to that.

I also heard him go out of his way to play nice with Speaker Boehner. He says that despite what all -- everybody in the political world speculated must have been tension and bad blood after the breakdown the big deal over the weekend, the president said that he felt Speaker Boehner was negotiating in good faith and he appreciates all his good efforts.

And then the president once again reiterated that he, personally, is willing to make some hard choices and take some, as he called it, heat on Medicare and Medicaid and Social Security with his own base.

So politically what the president is doing is saying, look, I'm all in, I'm putting everything out there and I'm willing to go big. Are you guys coming with me?

So both the political message to independents in this election season, that he's trying. At least, if it didn't work, he tried. And also a strategic message at the negotiating table that he's willing to lead. Is everybody going to go there with him? That's at least how he's positioning it publicly.

I had this 2:00 meeting where again, as I said earlier, he has asked all sides to come with some specifics so they can actually start hammering together the outlines of a real deal, probably that middle way, but we will see, Suzanne.

MALVEAUX: OK. Thank you, Jessica.

And Wolf, it's interesting, Jessica said that really, it seemed like the president was going out of his way to give credit to Speaker Boehner. But, you know, some of the things I heard, I heard him saying that this, you know, was a moral imperative for Republicans to get the fiscal house in order. That he bent over backwards to try and negotiate with them. What did you make of that? Did you think it was very political, that he really was going after the GOP, or is he also looking at Democrats and saying roll up your sleeves?

BLITZER: My sense, Suzanne, is he was clearly trying to stake out that middle ground, noting he has an enormous problem with his liberal base in the Democratic Party by putting Social Security and Medicare even on the table for some sort of cuts in terms of benefits for Social Security and Medicare recipients.

He knows that the Republicans have a problem, that Boehner has a serious problem. I don't know how they're going to get out of this. I suspect his problem is not as serious as the Republican problem is.

But let's bring in Gloria Borger and John King. They've been listening and watching this very, very carefully.

It reminded me, and you know, that word triangulation, that we heard so much during the Clinton administration, where then-President Bill Clinton angered his own base by going for some welfare reform, some other issues. The president now clearly saying, you know what, this is the moment -- both parties have to be irritating some of their respective bases.

BORGER: Right. He said he was willing to do that with his Democrats. The Republicans have to be willing to do it with the folks who say no tax increases.

And I also think he directed some of his comments to Republicans saying, look, we have heard all of your campaign statements about how you care and how the deficit and how the deficit is so important to our children's future. And what he was saying here is, we need to do something for the greater good. So we each need to kind of put our down arms, if you will, and figure out a way out of this.

And he also made the point, this is what the public wants us to do. In the end, we will all get credit for doing something like this. But I didn't hear a path out of this.

BLITZER: Yes. I was a little bit more pessimistic in the aftermath of this news conference, John, than I was going in that there would be a deal, given the positioning that the president lays out.

KING: I don't see a path to a deal if they don't budge.

BORGER: Right.

KING: That, from the president of the United States. The question being, if the Republicans don't give him something on revenue increases, tax increases, call it what you will.

It's interesting. You know, we went through this in our many years covering the White House together -- what is the president's goal? What transaction is he trying to accomplish when he decides to have a press conference? What is he trying to do. Hard to answer the question. There's no question he is trying to convince the American people, I'm in the middle. I'm willing to give, I'm willing to go to my party and say you're hurting. I understand there's hurt on their side. I want to help everybody deal with that hurt and get a deal that's good for the country.

That's an important message from the president.

Politely, he tried to essentially pressure the Republicans. Nice words about Speaker Boehner. They've developed a relationship. But he says, you know, they campaigned on deficits and spending cuts. Well, where are they?

If they mean what they say, where are they? So the president is trying to say, I'm trying to give you much of what you want, not everything. Where are you? And try to create the moment, pull off the Band-Aid, eat our peas, trying to make the point that politicians need to step up and do their jobs here, even if it causes them some hurt.

One things the Republicans will take away from this, Wolf, is that coming out of the weekend, when Speaker Boehner did walk away from the big deal, the Democratic narrative was, ah-ha, it's the Republicans walking away from the big deal. The president did say, "To be fair" -- his words -- "To be fair," selling those bigger Medicare, bigger Social Security cuts would have been hard on the Democratic side, that he didn't have full agreement with his party there as well.

BLITZER: And at one point he said, "I have bent over backwards to try to reach some sort of compromise with Speaker Boehner."

And he did note and he did go out of his way, Suzanne, in making the point that as far as any tax increases would be concerned, tax revenue hikes, whatever you want to call it, he said nothing would go into effect until after the 2012 election, starting in 2013. They would remove some of those loopholes, and he referred to some of those deductions for the corporate jet owners, for the big oil companies and others. There would be no tax increases this year, he says, or next year, but starting in 2013.

I don't know how that's going to play with the Republicans. It sounds to me, Suzanne, like the Republicans are going to come back and say, you know what? We'll take all the spending cuts, and we'll increase the debt ceiling, but that's going to be the bottom line position. You heard the president say that's what they're saying in these private meetings.

I don't know if the president is going to budge on that, but we'll find out soon enough.

MALVEAUX: Yes, sure. And Wolf, so far the Republicans, that's remained their position.

I want to bring in our Ali Velshi.

Because, Ali, did you hear anything from the president's address here that gave any kind of optimism that there was a way forward?

VELSHI: You know, nothing new. He did make the point that we don't really know how international markets are going to respond to the idea that a default comes on August 2nd. I think he was playing that middle ground in terms of saying this could be very serious and it could end up resulting in an increase in interest rates and a decrease in available credit without calling it Armageddon or suggesting that the world's going to grind to a halt.

The important thing here that he didn't really talk about is that our entire economy runs on credit from a personal level, a business level, and a government level. We're just not a cash society. And if this doesn't get done, it will affect the availability of credit, something that has prevented this economy from running on all cylinders.

Look, we've recovered in a lot of places in this economy, but the fact is there are investments to be made and people can't get money for it. So the president was cautioning that that might not happen. You know, that we might face credit problems.

The other point he made which I think is important is that Social Security isn't part of this deal. Social Security checks are not likely the thing that isn't going to get paid on August 2nd or beyond, but that is a tough discussion. And if you are having the tough discussion, why not have that now, as opposed to leave that for later?

So there's a sense that he's accepting the fact this is all- encompassing in terms of revenue and in terms of spending. So I actually leave this conversation, Suzanne, a little more hopeful than Wolf and John and Gloria do, because it is important, and we've still got three weeks. And he's treating this as urgent.

MALVEAUX: All right.

VELSHI: I think if more people get on that bandwagon, we might get closer to a deal.